A Decade of Debt by Carmen M. Reinhart

By Carmen M. Reinhart

This e-book offers proof that public money owed within the complex economies have surged in recent times to degrees now not recorded because the finish of global conflict II, surpassing the heights reached throughout the First international conflict and the nice melancholy. while, deepest debt degrees, fairly these of monetary associations and families, are in uncharted territory and are (in various levels) a contingent legal responsibility of the general public zone in lots of international locations. traditionally, excessive leverage episodes were linked to slower fiscal development and a better occurrence of default or, extra in general, restructuring of private and non-private bills. A extra sophisticated kind of debt restructuring within the guise of economic repression (which had its heyday throughout the tightly regulated Bretton Woods procedure) additionally importantly facilitated sharper and extra swift debt aid than might have another way been the case from the overdue Forties to the Nineteen Seventies. it truly is conjectured right here that the urgent wishes of governments to lessen debt rollover dangers and scale down emerging curiosity costs in gentle of the great debt overhang (combined with the frequent reputable aversion to particular restructuring) are resulting in a revival of economic repression, together with extra directed lending to govt by means of captive family audiences (such as pension funds), specific or implicit caps on rates of interest, and tighter rules on cross-border capital pursuits.

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1989. How Sovereign Debt Has Worked. In Developing Country Debt and Economic Performance, volume 1, ed. Jeffrey Sachs. Chicago: University of Chicago Press. , and Marco E. Terrones. 2008. An Anatomy of Credit Booms: Evidence from Macro Aggregates and Micro Data. NBER Working Paper 14049 (May). Cambridge, MA: National Bureau of Economic Research. Milesi-Ferretti, Gian Maria, Francesco Strobbe, and Natalia Tamirisa. 2010. Bilateral Financial Linkages and Global Imbalances: A View on The Eve of the Financial Crisis.

Because our data span 44 countries with many going back to the 1800s or at least the beginning of the 19th century, our analysis is based on all the episodes of high (above 90 percent) debt for the post–World War II period; for the pre-war sample it covers all those for which data are available. 17 It is common knowledge that the United States emerged after World War II with a very high debt level. But this also held for Australia, Canada, and most markedly the United Kingdom, where public debt/GDP peaked at near 240 percent in 1948.

2001. Is the Crisis Problem Growing More Severe? Economic Policy 16 (April): 51–82. Bruno, Michael, and William Easterly. 1998. Inflation Crises and Long-Run Growth. Journal of Monetary Economics 41, no. 1 (February): 3–26. Calvo, Guillermo. 1988. Servicing the Public Debt: The Role of Expectations. American Economic Review 78, no. 4 (September): 647–61. Caprio, Gerard, Daniela Klingebiel, Luc Laeven, and Guillermo Noguera. 2005. Banking Crisis Database. In Systemic Financial Crises, ed. Patrick Honohan and Luc Laeven.

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